Why do baked textures turn out checkered or blocky?
Try to increase/decrease that parameter before baking:
Render - Baking - Ray Distance. 
Begin with small ray amount - 0.1 or around it.
Also, some information from this video also can help:
https://www.youtube.com/watch?v=0r-cGjVKvGw

P.S. As i can judge by shape - you unwrapped your mesh properly? Re-check it, just to be sure.